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Tough European economy hits USG revenue

April 21, 2009

European staffing firm USG People reported first-quarter revenue fell 22% year-over-year to euro755.0 (US$997.0 million). The company reported tough economic conditions, but said it's increasing the pace of cost-cutting measures.

 "We are currently steering a course through a major storm in the European temporary employment market," said CEO Ron Icke. "The extent and speed of the decline in volumes in the temporary employment market in recent months are unprecedented."

The decrease in revenue was lowest in the Netherlands and Belgium, where USG People's revenue fell by 14% and 18% respectively. The company said it outperformed the markets in both countries — the Netherlands saw an 18% decline in its overall staffing market and a 20% decline in Belgium was expected.

Overall revenue fell by a third in other European countries served by the company. However, Spain was hard hit with a 50% decrease in revenue.

USG People's first-quarter gross margin narrowed to 23.3% from 24.7% in the same period last year.

The company posted a first-quarter net loss of euro18.0 million (US$23.6 million) compared with net income of euro29.0 million in the first quarter of 2007.

USG People said it's cutting more costs and plans to reduce full-time positions by 800 with most of the reduction coming from not replacing the natural flow of people leaving. The company also said it will close 85 branches.

The Almere, Netherlands-based staffing firm operates in the European market.

USG People
For the first quarter ended March 31, 2009, compared with the same period in the previous year.
Revenue: euro 755.0 million (US$997.0 million), -22%
Net loss: euro18.0 million (US$23.6 million) vs. net income of euro29.0 million